tZERO aims at securing the broker-dealer license to allow for trading of security tokens and other traditional stocks.
Overstock was one of the earliest adopters of Bitcoin, and now its tZERO wants to push that further through the tZERO Crypto App.
The crypto exchange announced the plan during its Q1 earnings call on April 30.
If it succeeds, tZERO Crypto users will trade cryptocurrencies, security tokens, and traditional stocks using one platform. tZERO’s CEO Saum Noursalehi wants to achieve this by acquiring approval from U.S. regulators by Q2 2020.
“tZERO plans to use its crypto wallet application to scale-up adoption for security token trading,” Noursalehi said during a recent interview.
tZERO Crypto is a separate entity from the main securities platform ‘tZERO ATS’, but has seen adoption increase by 40% in the first three months of 2020.
The platform plans to run the new venture on the broker-dealer subsidiary, to be called tZERO Markets. But Noursalehi is aware of the challenges of securing regulatory approval and said as much during the interview. While still optimistic of a Q2 approval, he noted that “one can never be sure with regulators.”
The app will support TZROP and OSTKO among other crypto securities and traditional stocks. tZERO also hopes that the user base for the app will increase even further as the company adds more securities.
The plans to have tZERO Markets operating are already in the hands of U.S financial regulator FINRA, which received the application earlier this year.
COVID-19 has sidelined investors
tZERO’s aggressive approach to the securities market is a clear plan targeted at wooing more investors. The hope is to offer more than two digital securities. That figure could be much higher, especially given that over 200 companies are in the process of using the tZERO platform to issue their own digital securities.
But the firm also acknowledges the impact of COVID-19 on what companies can and cannot do at the moment. Noursalehi pointed to the chaos brought about by massive market volatility in the wake of the pandemic.
The sentiment was summed by Overstock CEO Jonathan Johnson. During the earnings call he said:
“Issuers have largely sidelined trading existing digital securities until market conditions normalize, so tZERO has seen a slowdown in issuers looking to raise capital.”
Overstock.com’s April sales rose 120% in year over year results, with the company noting that COVID-19 had impacted business. However, its crypto sector fared much better.
According to the firm, most of its blockchain companies continue to attract added public attention. Part of the reason is that their use of blockchain technology offers services that are helping solve people’s problems.